Acquisitions and Dispositions

6 Months Ended

Jun. 29, 2024

Acquisition

Nehring Electrical Works Company

On April 19, 2024, the Company entered into an equity purchase agreement to acquire Nehring Electrical Works Company and certain of its affiliated companies (collectively, “Nehring”). The transaction closed on May 28, 2024, whereby the Company purchased all of the outstanding equity of Nehring for approximately $594.6 million, net of working capital adjustments. The total purchase price consisted of $566.6 million in cash on hand at closing and a contingent consideration arrangement which requires the Company to pay the sellers up to $25.0 million based on EBITDA growth of the acquired business. Nehring produces high-quality wire and cable solutions for the utility, telecommunication, electrical distribution, and OEM markets. Nehring provides the Company a substantial platform for expansion in the energy infrastructure space. The acquired business is reported in the Company’s Industrial Metals segment.

The provisional fair value of the assets acquired totaled $164.5 million, consisting primarily of property, plant, and equipment of $82.4 million, accounts receivable of $44.2 million, inventories of $36.1 million, and other current assets of $1.8 million. The fair value of the liabilities assumed totaled $27.8 million, consisting primarily of accounts payable of $19.6 million and other current liabilities of $8.2 million. Of the remaining purchase price, $457.9 million was allocated to tax-deductible goodwill and intangible assets. The purchase price allocation is provisional as of June 29, 2024 and subject to change upon the completion of the final valuation of the long-lived assets, working capital, and contingent consideration during the measurement period.

For the twelve months ended December 31, 2023, Nehring’s annual net sales were approximately $400.0 million.

The following table presents condensed pro forma consolidated results of operations as if the Nehring acquisition had occurred at the beginning of the periods presented. The pro forma information does not purport to be indicative of the results that would have been obtained if the operations had actually been combined during the periods presented, and is not necessarily indicative of operating results to be expected in future periods. The most significant pro forma adjustments to the historical results of operations relate to the application of purchase accounting, the financing structure, and estimated income taxes.


	For the Six Months Ended
(In thousands, except per share data)	June 29, 2024		July 1, 2023

Net sales	$	1,981,861	$	2,081,325
Net income	306,525		371,445

Basic earnings per share	$	2.75	$	3.34
Diluted earnings per share	2.69		3.28

Disposition

Heatlink Group

On September 2, 2021, the Company entered into a contribution agreement with a limited liability company in the retail distribution business, pursuant to which the Company exchanged the outstanding common stock of Die-Mold for a 17 percent equity interest in the limited liability company. Die-Mold manufactures PEX and other plumbing-related fittings and plastic injection tooling in Canada and sells these products in Canada and the U.S. and was included in the Piping Systems segment.

Effective July 3, 2023, the Company transferred 100 percent of the outstanding shares of Heatlink Group, Inc. and Heatlink Group USA, LLC for an additional 11 percent equity interest in the limited liability company. Heatlink Group produces a complete line of products for PEX plumbing and radiant systems in Canada and sells these products in Canada and the U.S. and was included in the Piping Systems segment. Heatlink Group reported net sales of $15.6 million and operating income of $1.7 million in the first half of 2023. As a result of the transaction, the Company recognized a gain of $4.1 million in the third quarter of 2023 based on the excess of the fair value of the consideration received (the 11 percent equity interest) over the carrying value of Heatlink Group. The Company equally weighted an income discounted cash flow approach and market comparable companies approach using an EBITDA multiple to determine the fair value of the consideration received of $26.0 million, which is recognized within the Investments in unconsolidated affiliates line of the Condensed Consolidated Balance Sheet. The excess of the fair value of the deconsolidated subsidiary over its carrying value resulted in the gain.